Is $ One Trillion In Exports Now Within Grasp Or A Mirage?

Something dramatic seems to have changed in the last two years, particular in the last year

For decades, India has underperformed when it comes to export of goods and services. India’s performance on this front is really poor when compared with economies of South East and East Asia. In fact, even Bangladesh has overtaken India in exports of readymade garments. In the pre pandemic year 2019-20, Bangladesh clocked readymade garments exports worth $ 33 billion while India managed just about $ 24 billion. Even overall, exports from India seem to have stagnated in the years preceding the pandemic. According to data made available by the Ministry of Commerce, exports grew by a meagre 10% during the first tenure of the NDA government led by Prime Minister Narendra Modi. Many analysts and commentators virtually gave up on India ever becoming an export powerhouse despite ambitious schemes like Make in India and the Performance Linked Incentive Scheme (PLI) that offered attractive incentives to manufacturers and exporters in selected sectors.

However, something dramatic seems to have changed in the last two years, particular in the last year when the world reeled under the impact of the Covid pandemic. For the first time ever, goods exports from India beached the $ 400 billion mark in 2021-22 to touch about $ 420 billion. In addition to that, services sector exports also crossed $ 250 billion for the first time during the same period. In effect, the total value of exports from India in the financial year 2021-22 was about $ 670 billion.. As the accompanying chart shows, between March 2020 and March 2022, the value of exports virtually doubled from $ 20 billion to $ 40 billion. The momentum seems to have been maintained in the first two months of the current financial year despite a slowdown in global economic growth. According to data released by the Ministry of Commerce on June 15, the total value of exports from India in May 2022 was valued at $ 62.21 billion. The value of merchandise exports was $ 38.94 billion while services sector exports accounted for another $ 23.28 billion in May 2022. Even if there is no more spectacular growth and the exports grow at current rates because of the global economic slowdown, total exports from India in the current financial year would be approaching $ 750 billion. Given that backdrop, the dream of $ one trillion in exports from India in the near future does appear to be a distinct possibility.

The PLI scheme seems to be paying off. Just one example would indicate its success. Exports of mobile phone handsets were valued at $ 3.14 billion in financial year 2020-21. They jumped about $ 5.2 billion in the financial year 2021-22 and are expected to maintain the growth momentum